R&I Profile

A Man of Principle

Those who know the business say the success of Arch is due to the drive, intellect and discipline of Dinos Iordanou.
By: | December 10, 2014 • 10 min read

Constantine “Dinos” Iordanou could be forgiven if he wasn’t in the best of moods when we talked to him. It was the day after his beloved Arsenal Soccer Club lost 2-1 to Swansea City.

Even more painful was the loss by the Virginia Cavaliers women’s soccer team to Florida State 1-0 in the ACC Championships that same day. Iordanou’s daughter Tina is on that team.

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“It was not a very good weekend for me,” said the chairman and CEO of the Arch Capital Group, a former soccer player who friends describe as an intense competitor in his own right.

All fans know that they cannot control the outcome of sporting events. But in the areas of his life that he does control, Dinos Iordanou simply does not lose.

The Arch Capital Group is a rarity among those Bermuda-based companies formed in 2001 — in the hardened market after the terror attacks — in that it wrote primary and reinsurance from the beginning. It clearly outperforms its classmates and is one of the darlings of Wall Street investors in this space.

Those who know the business and know Iordanou say the success of Arch is due to his drive, intellect and discipline.

The Police Academy

Iordanou, in turn, is quick to point to the roots of that ambition and self-control. They begin on the island of Cyprus, where Iordanou was the eldest of six children.

Iordanou’s father Philippos was a police officer. The family struggled to make ends meet.

“You know how far a policeman’s salary can go,” Iordanou said.

The only great thing for me, I was the first born, the hand-me-downs went to my brothers.” — Dinos Iordanou

“We always had food to eat but we didn’t always have the best clothes. The only great thing for me, I was the first born, the hand-me-downs went to my brothers,” Iordanou said with a chuckle.

In the house of Philippos Iordanou, you were expected to work hard and make something of yourself. All the kids had jobs after school. The money they earned was theirs for pocket money but sometimes it was needed to help the family cover its grocery bills.

As Dinos matured, his father made it clear to him that it was in the United States that he was expected to make his fortune.

“My father was very disciplined, he ran the house like it was the police academy,” Iordanou said.

After his mandatory military service, Iordanou boarded the SS Queen Anna Maria to the United States — the family couldn’t afford a plane ticket — and journeyed by himself for 17 days.

If Iordanou was expecting helicopter parent behavior from his father, he wasn’t going to get it.

“When I got here, I called him and his first words were, ‘Did you get a job yet?’ and his second were ‘Did you register for school?’ He didn’t ask me if I had a good time or if I was OK,” Iordanou recalled.

Iordanou was clear on his marching orders. With an uncle in Astoria, Queens, providing the roof over his head, Iordanou’s first job was pumping gas at a Shell station. He also washed dishes in a nursing home, drove a cab and worked as a cook.

“You’ve got to earn your way through school and get on,” Iordanou said.

With his father’s voice in his head, Iordanou moved on and stayed on track. He graduated from New York University with a degree in aerospace engineering.

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His first job out of school was with Pratt & Whitney, assessing the condition of wheels on New York City Transit subway cars. But as an immigrant, Iordanou soon realized that he would never get the clearances to do more involved public sector work.

“The career would have been over before it started,” he said.

A college counselor suggested that Iordanou turn to Wall Street and consider a career in finance or insurance. Iordanou’s next job was with AIG.

The School of Greenberg

At AIG, Iordanou, who started out assessing engineering risks for underwriters, found himself rubbing shoulders with an equally young, talented and ambitious group. Many of them, like him, would go on to important leadership positions in the industry.

“[AIG] would give you a lot of exposure, understanding all the facets of the business as long as you were willing and able to put in the time.” — Dinos Iordanou

Colleagues like Kevin Kelley, the future head of Lexington and later Ironshore; Brian Duperreault, the builder of ACE Ltd. and now CEO of the Hamilton Insurance Group; Evan Greenberg, ACE’s current CEO, president and chairman; and Joe Taranto, the retired chairman of Everest Re; were Iordanou’s classmates in what we will call the School of Greenberg — the company run by former AIG Chairman and CEO Hank Greenberg.

Iordanou put in 80 hours per week as part of AIG’s “fast track” program, which identified promising future executives and gave them a lot of exposure. In addition to their assigned jobs, they were rotated through different areas of the company, to learn as much about the business as possible.

Iordanou wasn’t working 80 hours per week because it was specifically asked of him. The young, hungry immigrant did it because he wanted to.

“They would give you a lot of exposure, understanding all the facets of the business as long as you were willing and able to put in the time,” Iordanou recalled.

“I was very hungry to learn and very hungry to get ahead. So to me it was a blessing,” he said.

Kevin Kelley, Chairman and CEO, Ironshore

Kevin Kelley, CEO, Ironshore

Ironshore’s Kevin Kelley recalls Dinos Iordanou as his kind of co-worker, someone who worked hard and was useful to his colleagues, but didn’t wear his ambitions on his sleeve.

“Dinos was a very, very bright guy, a very driven guy,” Kelley said.

“I think his colleagues respected him. He had the right perspective on how one should be ambitious,” Kelley said.

“He was charismatic, self-assured and personable and while he was certainly aggressive, with a desire to succeed, it was clear he had great leadership skills,” recalls Brian Duperreault, an AIG alumnus and the CEO of The Hamilton Insurance Group.

“He’s a born leader,” Duperreault said.

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Iordanou’s big break came after the passage of the Resource Conservation and Recovery Act in 1976, which called for closer governance of hazardous waste disposal. Iordanou in 1979 was given the responsibility of creating an environmental liability group at AIG.

“It was new and it had quite a bit of risk in it,” Iordanou said. It was also closely watched by Hank Greenberg, by reputation a very detail-oriented business manager.

“After that, I started getting promoted with more responsibilities and more divisions,” he said.

“[Iordanou] was charismatic, self-assured and personable and while he was certainly aggressive, with a desire to succeed, it was clear he had great leadership skills.” — Brian Duperreault, CEO, The Hamilton Insurance Group.

When Iordanou was recruited away from AIG to Berkshire Hathaway in 1987, he was 37 years old and in charge of all casualty at AIG subsidiary American Home, overseeing a division with $1.7 billion in revenue.

That was an experience reflected by his equally ambitious teammates. At the age of 36, Kevin Kelley was running Lexington.

“All I know is that every day they seemed to be throwing more at you,” Kelley recalled of those days.

“I guess Greenberg saw how you responded and if you liked it he just gave you more.”

First Hank Greenberg, then Warren Buffett

At Berkshire Hathaway, Iordanou was eventually placed in charge of all casualty. The graduate of the School of Greenberg also had a new mentor — Warren Buffett.

“He provided lessons in understanding business every single day.” — Dinos Iordanou, on Warren Buffett, Berkshire Hathaway chairman, known worldwide as the “Sage of Omaha.”

“He provided lessons in understanding business every single day,” Iordanou said of the Berkshire Hathaway chairman, known worldwide as the “Sage of Omaha.”

“He is beyond brilliant. He has a style almost like a college professor. Every time he speaks, you are learning something from him,” Iordanou said.

The ambitious and now in-demand Iordanou had a handshake agreement with Buffett to stay for five years. He honored that agreement, then left to take on a variety of roles at Zurich North America.

During his tenure at Zurich, Iordanou needed to consolidate a number of troubled businesses. That meant he wasn’t engaged in building the business to the degree he would have liked.

“You’re putting such an emphasis on remodeling the house that you don’t have time to be adding any rooms to it,” he said.

Iordanou also chafed at not seeing the path that would take him to CEO.

“The CEO at the time did not want to give up the top job and I just didn’t want to be there to have a lot of responsibility and not have the ability to run the company,” he said.

The Founding of Arch

Then came the terror attacks of Sept. 11, 2001 and the drive to bring new capacity to the market in the form of the “Class of 2001.” Arch, Allied World, Axis, Endurance and Montpelier were all formed by the end of that year.

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Paul Ingrey was brought out of retirement to run Arch’s reinsurance operations and Iordanou was tapped to head up the U.S. insurance operation.

In that respect, Arch was very different from its classmates, the rest of which were reinsurance companies.

“Our view was that when the market cycle was turning that there would be very good opportunities across the spectrum of insurance,” he said.

Arch’s board made the commitment to sacrifice short-term results in the effort to create a more diverse company.

It’s an effort that is now paying off by the bucket load.

“If you are a mono-line company in a cyclical business and the sector you have dominance in becomes highly competitive, what do you do?” — Dinos Iordanou

“Diversity allows you room to navigate,” Iordanou said.

“If you are a mono-line company in a cyclical business and the sector you have dominance in becomes highly competitive, what do you do?”

Arch’s financial reports show just how successful Iordanou’s approach is.

One area where Arch excels is the program business.

From 2011 to 2012, Arch saw net premiums written growth of 17 percent in programs. That was followed by 23 percent growth from 2012 to 2013.

“We have been in the program business from the beginning, but we have a very disciplined approach,” Iordanou said.

Iordanou’s view is that the managing general underwriters in the program business excel at marketing and distribution but need to be governed by a firm underwriting hand.

“Usually, we look for programs to be an extension of our system as long as our program administrators are willing to have that kind of partnership,” Iordanou said.

Program administrators working with Arch can underwrite business but they must do it within Arch’s pricing guidelines. By net premiums written, programs are the biggest piece of Arch’s primary insurance business. The company is trimming its exposure to property, marine, energy and aviation.

Another area where Arch is distinguishing itself is in the private mortgage insurance business. Arch launched Arch Mortgage Insurance in 2011 and is growing it through acquisitions.

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In 2013, Arch bought the assets of the bankrupt Private Mortgage Insurance company, or PMI, for $300 million.

“I think the step into the mortgage business was smart, it was timely and it was quite unique,” said Kelley.

“They were entering at a time when the wind was at their back. As with most ventures, timing is extraordinarily important,” Kelley said.

To Iordanou, the mortgage business move gives him the diversity he craves as much as he craves an Arsenal goal.

“Us buying that asset from PMI creates over time a competitive advantage,” he said.

Don’t think, given Arch’s success, that Iordanou is done innovating.

“For some CEOs, once they’ve built a successful company, they don’t want to take any more chances,” the Hamilton Insurance Group’s Duperreault said.

“Ironically, they become risk averse, and in that process, they make mistakes in trying to avoid them. That’s not Dinos, and he‘s obviously not finished building Arch.”

Loyal to his Roots

Pat Ryan, founder and chairman,Ryan Specialty Group

Pat Ryan, founder and chairman, Ryan Specialty Group

Pat Ryan, founder and chairman of the Chicago-based Ryan Specialty Group, counts Iordanou as a dear friend. He also considers him an industry standout.

“Dinos is very strategic in his thinking and is very definite,” Ryan said.

“He is not unwilling to be a contrarian and in fact I think he kind of likes being a contrarian,” Ryan said.

Ryan, who also founded Aon, said Iordanou’s reverence for his roots and for his family is unshakable.

“Dinos is a very deeply loyal person,” Ryan said of the man who now commands a company with total assets of $22.6 billion.

“He is very proud of his heritage and very proud of his background and he keeps those front of mind.”

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Exclusive | Hank Greenberg on China Trade, Starr’s Rapid Growth and 100th, Spitzer, Schneiderman and More

In a robust and frank conversation, the insurance legend provides unique insights into global trade, his past battles and what the future holds for the industry and his company.
By: | October 12, 2018 • 12 min read

In 1960, Maurice “Hank” Greenberg was hired as a vice president of C.V. Starr & Co. At age 35, he had already accomplished a great deal.

He served his country as part of the Allied Forces that stormed the beaches at Normandy and liberated the Nazi death camps. He fought again during the Korean War, earning a Bronze Star. He held a law degree from New York Law School.

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Now he was ready to make his mark on the business world.

Even C.V. Starr himself — who hired Mr. Greenberg and later hand-picked him as the successor to the company he founded in Shanghai in 1919 — could not have imagined what a mark it would be.

Mr. Greenberg began to build AIG as a Starr subsidiary, then in 1969, he took it public. The company would, at its peak, achieve a market cap of some $180 billion and cement its place as the largest insurance and financial services company in history.

This month, Mr. Greenberg travels to China to celebrate the 100th anniversary of C.V. Starr & Co. That visit occurs at a prickly time in U.S.-Sino relations, as the Trump administration levies tariffs on hundreds of billions of dollars in Chinese goods and China retaliates.

In September, Risk & Insurance® sat down with Mr. Greenberg in his Park Avenue office to hear his thoughts on the centennial of C.V. Starr, the dynamics of U.S. trade relationships with China and the future of the U.S. insurance industry as it faces the challenges of technology development and talent recruitment and retention, among many others. What follows is an edited transcript of that discussion.


R&I: One hundred years is quite an impressive milestone for any company. Celebrating the anniversary in China signifies the importance and longevity of that relationship. Can you tell us more about C.V. Starr’s history with China?

Hank Greenberg: We have a long history in China. I first went there in 1975. There was little there, but I had business throughout Asia, and I stopped there all the time. I’d stop there a couple of times a year and build relationships.

When I first started visiting China, there was only one state-owned insurance company there, PICC (the People’s Insurance Company of China); it was tiny at the time. We helped them to grow.

I also received the first foreign life insurance license in China, for AIA (The American International Assurance Co.). To date, there has been no other foreign life insurance company in China. It took me 20 years of hard work to get that license.

We also introduced an agency system in China. They had none. Their life company employees would get a salary whether they sold something or not. With the agency system of course you get paid a commission if you sell something. Once that agency system was installed, it went on to create more than a million jobs.

R&I: So Starr’s success has meant success for the Chinese insurance industry as well.

Hank Greenberg: That’s partly why we’re going to be celebrating that anniversary there next month. That celebration will occur alongside that of IBLAC (International Business Leaders’ Advisory Council), an international business advisory group that was put together when Zhu Rongji was the mayor of Shanghai [Zhu is since retired from public life]. He asked me to start that to attract foreign companies to invest in Shanghai.

“It turns out that it is harder [for China] to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

Shanghai and China in general were just coming out of the doldrums then; there was a lack of foreign investment. Zhu asked me to chair IBLAC and to help get it started, which I did. I served as chairman of that group for a couple of terms. I am still a part of that board, and it will be celebrating its 30th anniversary along with our 100th anniversary.

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We have a good relationship with China, and we’re candid as you can tell from the op-ed I published in the Wall Street Journal. I’m told that my op-ed was received quite well in China, by both Chinese companies and foreign companies doing business there.

On August 29, Mr. Greenberg published an opinion piece in the WSJ reminding Chinese leaders of the productive history of U.S.-Sino relations and suggesting that Chinese leaders take pragmatic steps to ease trade tensions with the U.S.

R&I: What’s your outlook on current trade relations between the U.S. and China?

Hank Greenberg: As to the current environment, when you are in negotiations, every leader negotiates differently.

President Trump is negotiating based on his well-known approach. What’s different now is that President Xi (Jinping, General Secretary of the Communist Party of China) made himself the emperor. All the past presidents in China before the revolution had two terms. He’s there for life, which makes things much more difficult.

R&I: Sure does. You’ve got a one- or two-term president talking to somebody who can wait it out. It’s definitely unique.

Hank Greenberg: So, clearly a lot of change is going on in China. Some of it is good. But as I said in the op-ed, China needs to be treated like the second largest economy in the world, which it is. And it will be the number one economy in the world in not too many years. That means that you can’t use the same terms of trade that you did 25 or 30 years ago.

They want to have access to our market and other markets. Fine, but you have to have reciprocity, and they have not been very good at that.

R&I: What stands in the way of that happening?

Hank Greenberg: I think there are several substantial challenges. One, their structure makes it very difficult. They have a senior official, a regulator, who runs a division within the government for insurance. He keeps that job as long as he does what leadership wants him to do. He may not be sure what they want him to do.

For example, the president made a speech many months ago saying they are going to open up banking, insurance and a couple of additional sectors to foreign investment; nothing happened.

The reason was that the head of that division got changed. A new administrator came in who was not sure what the president wanted so he did nothing. Time went on and the international community said, “Wait a minute, you promised that you were going to do that and you didn’t do that.”

So the structure is such that it is very difficult. China can’t react as fast as it should. That will change, but it is going to take time.

R&I: That’s interesting, because during the financial crisis in 2008 there was talk that China, given their more centralized authority, could react more quickly, not less quickly.

Hank Greenberg: It turns out that it is harder to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.

R&I: Obviously, you have a very unique perspective and experience in China. For American companies coming to China, what are some of the current challenges?

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Hank Greenberg: Well, they very much want to do business in China. That’s due to the sheer size of the country, at 1.4 billion people. It’s a very big market and not just for insurance companies. It’s a whole range of companies that would like to have access to China as easily as Chinese companies have access to the United States. As I said previously, that has to be resolved.

It’s not going to be easy, because China has a history of not being treated well by other countries. The U.S. has been pretty good in that way. We haven’t taken advantage of China.

R&I: Your op-ed was very enlightening on that topic.

Hank Greenberg: President Xi wants to rebuild the “middle kingdom,” to what China was, a great country. Part of that was his takeover of the South China Sea rock islands during the Obama Administration; we did nothing. It’s a little late now to try and do something. They promised they would never militarize those islands. Then they did. That’s a real problem in Southern Asia. The other countries in that region are not happy about that.

R&I: One thing that has differentiated your company is that it is not a public company, and it is not a mutual company. We think you’re the only large insurance company with that structure at that scale. What advantages does that give you?

Hank Greenberg: Two things. First of all, we’re more than an insurance company. We have the traditional investment unit with the insurance company. Then we have a separate investment unit that we started, which is very successful. So we have a source of income that is diverse. We don’t have to underwrite business that is going to lose a lot of money. Not knowingly anyway.

R&I: And that’s because you are a private company?

Hank Greenberg: Yes. We attract a different type of person in a private company.

R&I: Do you think that enables you to react more quickly?

Hank Greenberg: Absolutely. When we left AIG there were three of us. Myself, Howie Smith and Ed Matthews. Howie used to run the internal financials and Ed Matthews was the investment guy coming out of Morgan Stanley when I was putting AIG together. We started with three people and now we have 3,500 and growing.

“I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

R&I:  You being forced to leave AIG in 2005 really was an injustice, by the way. AIG wouldn’t have been in the position it was in 2008 if you had still been there.

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Hank Greenberg: Absolutely not. We had all the right things in place. We met with the financial services division once a day every day to make sure they stuck to what they were supposed to do. Even Hank Paulson, the Secretary of Treasury, sat on the stand during my trial and said that if I’d been at the company, it would not have imploded the way it did.

R&I: And that fateful decision the AIG board made really affected the course of the country.

Hank Greenberg: So many people lost all of their net worth. The new management was taking on billions of dollars’ worth of risk with no collateral. They had decimated the internal risk management controls. And the government takeover of the company when the financial crisis blew up was grossly unfair.

From the time it went public, AIG’s value had increased from $300 million to $180 billion. Thanks to Eliot Spitzer, it’s now worth a fraction of that. His was a gross misuse of the Martin Act. It gives the Attorney General the power to investigate without probable cause and bring fraud charges without having to prove intent. Only in New York does the law grant the AG that much power.

R&I: It’s especially frustrating when you consider the quality of his own character, and the scandal he was involved in.

In early 2008, Spitzer was caught on a federal wiretap arranging a meeting with a prostitute at a Washington Hotel and resigned shortly thereafter.

Hank Greenberg: Yes. And it’s been successive. Look at Eric Schneiderman. He resigned earlier this year when it came out that he had abused several women. And this was after he came out so strongly against other men accused of the same thing. To me it demonstrates hypocrisy and abuse of power.

Schneiderman followed in Spitzer’s footsteps in leveraging the Martin Act against numerous corporations to generate multi-billion dollar settlements.

R&I: Starr, however, continues to thrive. You said you’re at 3,500 people and still growing. As you continue to expand, how do you deal with the challenge of attracting talent?

Hank Greenberg: We did something last week.

On September 16th, St. John’s University announced the largest gift in its 148-year history. The Starr Foundation donated $15 million to the school, establishing the Maurice R. Greenberg Leadership Initiative at St. John’s School of Risk Management, Insurance and Actuarial Science.

Hank Greenberg: We have recruited from St. John’s for many, many years. These are young people who want to be in the insurance industry. They don’t get into it by accident. They study to become proficient in this and we have recruited some very qualified individuals from that school. But we also recruit from many other universities. On the investment side, outside of the insurance industry, we also recruit from Wall Street.

R&I: We’re very interested in how you and other leaders in this industry view technology and how they’re going to use it.

Hank Greenberg: I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.

R&I: So as the pre-eminent leader of the insurance industry, what do you see in terms of where insurance is now an where it’s going?

Hank Greenberg: The country and the world will always need insurance. That doesn’t mean that what we have today is what we’re going to have 25 years from now.

How quickly the change comes and how far it will go will depend on individual companies and individual countries. Some will be more brave than others. But change will take place, there is no doubt about it.

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More will go on in space, there is no question about that. We’re involved in it right now as an insurance company, and it will get broader.

One of the things you have to worry about is it’s now a nuclear world. It’s a more dangerous world. And again, we have to find some way to deal with that.

So, change is inevitable. You need people who can deal with change.

R&I:  Is there anything else, Mr. Greenberg, you want to comment on?

Hank Greenberg: I think I’ve covered it. &

The R&I Editorial Team can be reached at [email protected]